Triple Freeport and Open for Business

Nov 08, 2013

By: Emilie Boenig Lutostanski with Community Impact

Due to significant gains in taxable value, 18 companies that have participated in Williamson County’s Freeport tax exemption program since 2010 will be released from their contract one year early, county officials announced Nov. 7.

The Freeport tax exemption allows goods that are in transit to be exempt from ad valorem taxation. In 2009, the county eliminated the Freeport tax, and local businesses agreed to a structured four-year phase out of the tax on items staying in Texas for fewer than 175 days.

In 2010, the companies paid 80 percent of the taxable value of Freeport items such as wares, merchandise and parts. In 2011, they paid 60 percent, and in 2012, they paid 40 percent. The businesses were supposed to pay 20 percent of the value of Freeport items in 2013.

In the agreement, the county incentivized businesses that significantly increased their taxable value during the phase-out process. The 18 companies that signed the original contract gained a combined $55 million in value—an increase of 45 percent—and therefore owe nothing on Freeport items in 2013.

Precinct 3 Commissioner Cynthia Long said the county and the companies had to work together to eliminate the tax. The phase-out allowed the county collect $538,887 in revenue from 2010–2012.

“This is what happens when government gets out of the way and lets businesses be successful,” Long said during a press conference held at ETS-Lindgren, a Cedar Park company that participated in the program. “We had to ask ourselves, ‘What can we do to implement this without shifting the tax burden to residents and other businesses?’”

The western portion of Williamson County is considered a triple Freeport exemption area since the school districts and both cities have also adopted the exemption. ETS-Lindgren President Bruce Butler said the tax savings for his company has helped it expand.

“This is really a business friendly environment. The Freeport exemption helped us bring people into the facility,” he said. “I recommend to anyone, especially my friends in California, to come do business in Williamson County.”

Since implementation in 2010, an additional 12 companies have located to Williamson County and claimed the Freeport exemption, adding $24 million in taxable value to the rolls, according to county documents.

Note: A triple Freeport exemption means the tax on certain business inventories is waived by the school district, city and county.